Supreme Court: No Dividend Exemption for Foreign Investors

THE HAGUE, 19/11/13 - The Supreme Court has ruled that foreign investment firms are not allowed to apply for repayment of dividend tax paid in the Netherlands. The country’s highest court has quashed a ruling by an appeal court in Den Bosch. At the beginning of last year, the Den Bosch court ruled that an investment fund based in Finland could apply for repayment of previously withheld dividend tax. Finance State Secretary Frans Weekers then appealed to the Supreme Court, and has now won. The Supreme Court has now ruled that a foreign fund is not comparable with a Dutch-registered legal entity that is not subject to corporate tax. There is no question of incompatibility with free movement of capital, according to the verdict. The case concerned a Finnish investment fund that received a dividend from investments in Dutch shares. Dividend tax had been withheld on this, which under Dutch law, the fund could not claim back. According to Het Financieele Dagblad, the Treasury continues to be spared a hit of 1 to 1.5 billion euros by the ruling. Weekers has never specified any amount.